After enjoying considerable success in the online gaming realm, all eyes were on Zynga as the company dipped its toes into the stockmarket waters, making its initial public offering last week at US$10.
It didn’t take long for those eager eyes to start spotting problems in the FarmVille creator’s strategies, either – with the company experiencing a “wobbly” start of trading – rising to US$11.50 at one point before bottoming out at US$9 and finally settling at US$9.50 at closing, a loss of 5% on debut.
While hopes were high, Zynga is just the latest in a long list of online-based companies suffering once they hit the NASDAQ open waters. LinkedIn, Groupon and Pandora have also suffered the same fate over the past calendar year.
Our approach has always been to focus on the long term. We thought this was the right time to go public. We’re going to focus on the products and business results we deliver in the next four to eight quarters and hope the stock market values and appreciates that as they see us deliver it.
While Pincus is looking to the future, his company is struggling in the present. Zynga is failing to maintain its runaway success and grow its massive playerbase. Believe it or not, with 227 million monthly users (54 million dailies), the company is having trouble increasing its profits.
According to analysts, the company is a victim of its own success – including an “overreliance” on Facebook, which generates 95% of the company’s gaming traffic to titles such as FarmVille, CityVille, Zynga Poker and new release, Castleville.